Car Prices have skyrocketed. Industry experts predict the trend won’t end soon.
A recent study found that new-vehicle prices rose to record levels in September 2021. That made the sixth straight month that average sales prices reached a record peak.
By now, you’ve heard about the micro-chip supply shortage. Modern vehicles rely on computer processing. As a result, the shortage causes vehicle manufacturers to have to wait to build new inventory.
The wait creates a backorder issue at the dealership. That means dealers feel less pressure to adjust pricing to move vehicles off their lots. If you don’t buy a particular vehicle now, someone else will before the day ends.
Think you can beat the system by choosing to buy used? You’ll be quickly disappointed.
Buyers who couldn’t wait for new inventory to replenish or didn’t want to pay premium prices, decided to buy previously-owned.
At this point, used car prices have also risen to all-time highs, with inventories dwindling due to increased demand.
Even More Bad News for Car Buyers
With demand for new vehicles at a fever-pitch, dealerships have little to no need to provide incentives (i.e. lowering financing rates, discounts).
Industry analyst Kayla Reynolds from Cox Automotive, stated in a recent interview, “As long as new-vehicle inventory remains tight, we believe prices will remain elevated.”
So how long will new-vehicle inventory remain strained?
Chuck Robbins, CEO of Cisco expects the chip-shortage to last another 12 to 18 months.
In the meantime consumers can expect new-vehicle prices to remain relatively high.
It's Not All Bad News. Here's a Few Pointers to Save Yourself Money.
First, accept you’ll be paying a higher price for a new vehicle. You can’t avoid that fact.
You can find a new vehicle with pricing that hasn’t risen as much as others.
VW, Subaru and Ford all had price decreases from August into September. Much of this has to do with their electric vehicle (EV) initiatives. EVs have yet to gain widespread acceptance, so inventories have not been as stressed.
Three vehicle segments had price drops in the August to September timeframe. Subcompact car had the highest drop in prices at 8.5%. Minivans and luxury vehicles had price drops of 1% and .4% respectively.
Analysts say that luxury vehicles, full-size truck and Midsize SUV sales increased, which drove up the average overall sales price. You can expect prices for vehicles in these segments to increase over the next few months, as already strained inventories will begin to be depleted.
Another Secret to Saving Yourself Money. Skip the Costly Trim Package Upgrade.
Car manufacturers and dealerships discovered an effective way to increase sales—trim package upgrades.
Trim package upgrades often force consumers to buy more than they want, to get what they want.
As an example, the vehicle-buyer may want power folding mirrors on their new truck. The problem will be that the power folding mirrors can’t be added to a less expensive base model truck.
The dealership forces the consumer to buy the mirrors as part of an overall trim package with multiple upgraded features. This trim package upgrade can increase the overall price by $20k to $40k in certain instances.
Beat the trim package hustle by purchasing an upgraded factory radio for example by itself. You’ll save thousands in most cases.
Factory upgrades will be a little more difficult to find, unless you know where to look. Infotainment.com offers factory vehicle upgrades for a wide range of vehicles.
Unlike eBay or a junkyard, infotainment.com's upgrades come with a warranty, pre-programmed to your vehicle by VIN and are setup for easy plug-and-play installations.